Iran War Drives Gas Prices Up, Costco May Benefit
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Should l Buy COST?
Source: Fool
- Impact of Rising Gas Prices: The ongoing Iran War has driven gas prices up, leading to increased traffic at Costco's member-only gas stations, which offer prices significantly lower than local averages, thereby boosting sales as more drivers visit both the gas stations and warehouse stores.
- Consumer Budget Tightening: Higher gas prices are forcing consumers to tighten their budgets, and Costco's appeal to budget-conscious shoppers with lower prices on bulk products is expected to result in increased sales of essential items, especially as other retailers struggle with discretionary sales.
- Enhanced Membership Services: Costco is enhancing member stickiness by offering lower rates on ancillary services such as vision, insurance, and travel bundles, which could attract more new members amid rising gas prices, further driving sales and membership growth.
- Future Outlook: While rising gas prices will increase Costco's transportation and energy costs, the company can offset these expenses by continually adding more cardholders and maintaining high renewal rates, positioning itself for continued stock price strength as gas prices provide strong tailwinds for its business.
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Analyst Views on COST
Wall Street analysts forecast COST stock price to rise
24 Analyst Rating
19 Buy
4 Hold
1 Sell
Strong Buy
Current: 979.650
Low
769.00
Averages
1061
High
1205
Current: 979.650
Low
769.00
Averages
1061
High
1205
About COST
Costco Wholesale Corporation (Costco) operates membership warehouses and e-commerce sites that offer a selection of nationally branded and private-label products in a wide range of categories. The Company buys the majority of its merchandise directly from suppliers and route it to cross-docking consolidation points (depots) or directly to its warehouses. It operates 891 warehouses, including 614 in the United States and Puerto Rico, 108 in Canada, 40 in Mexico, 35 in Japan, 29 in the United Kingdom, 19 in Korea, 15 in Australia, 14 in Taiwan, seven in China, five in Spain, two in France, and one each in Iceland, New Zealand and Sweden. It also operates e-commerce sites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia. The Company provides wide selection of merchandise, plus the convenience of specialty departments and exclusive member services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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See More
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